What Drives the Performance of the SME Sector? Evidence From Selected European Countries

Abstract

Small and medium-sized enterprises (SME) are highly important for economic development of every nation. Recently, many experts and policymakers have been trying to measure the performance and efficiency of these businesses. However, the methods used so far are often idiosyncratic, subjective, or static. This paper suggests a new way to measure the success of these businesses using a data-driven method. More specifically, we combine decision-making techniques (namely, TOPSIS) and preference learning techniques. This innovative approach is flexible and can adapt to changes over time by iterative preference elicitation and TOPSIS calculation. As a part of the case-study of the proposed approach, we found that Ireland is a great example to follow and that the ’think-small-first’ principle is the most important driver of the SME growth. The findings can help government officials and analysts, especially when they are planning policies for small and medium-sized enterprises.